If you’ve been tracking monthly affidavit counts for Maricopa, you’ve likely noticed the new home market has taken a hit over the past six months. New homes have steadily lost market share to resales, dropping from 28% to 24% in December 2024 compared to the previous year.
In response, builders appear to be scaling back production. December's permit count for Maricopa and Pinal counties hit just 1,653—the lowest monthly total since February 2023. For context, December 2023 saw 2,095 permits. This downward trend suggests a potential squeeze on new home supply in the months ahead.
The slowdown may be driven by perceived weakening demand, but government policy changes also loom large, potentially complicating matters for developers in 2025 and beyond:
Rising Tariffs: Higher tariffs on materials imported from Canada, Mexico, and China are expected to increase building costs. Builders face the choice of paying more for imported materials or shifting to pricier American-made alternatives—both of which could impact their profit margins.
Labor Shortages: A crackdown on undocumented workers in construction threatens to create skill gaps and delay build times. Arizona’s construction industry employs an estimated 34,000 undocumented workers, roughly 80% of whom are from Mexico. While these workers often aren’t directly employed by major homebuilders, they are critical to subcontractors and specialized trades.
If deportation policies intensify, the construction sector could face severe workforce shortages. Many of these roles are difficult to fill with American workers due to the demanding conditions, and homebuilders have long warned that the domestic labor pool cannot fully replace this workforce.
Supply, Demand, and Home Prices 
Home prices are primarily driven by supply and demand, not just construction or land costs. If builders struggle to absorb rising expenses, they may see a drop in sales. However, this could be good news for existing homeowners, who would face less competition and potentially higher resale prices. If prices rise enough, new homebuilders may regain competitive footing despite increased costs.
That said, if deportations extend more broadly, Arizona’s housing market could face a different challenge: diminished demand. As of recent estimates, Arizona is home to approximately 250,000 to 264,600 undocumented immigrants, accounting for about 3.5% of the state's population. Of these, around 157,000 are employed, representing 60% of the undocumented population aged 16 and older. Notably, according to the Migration Policy Institute, approximately 22% of undocumented workers in Arizona are employed in the construction industry, totaling around 34,000 individuals. Determining the exact percentage of all construction workers in Arizona who are undocumented is challenging due to data limitations.
Given that a significant portion of undocumented workers are employed in construction, it's reasonable to infer that undocumented individuals make up a notable segment of Arizona's construction labor force. Their sudden removal could disrupt housing demand and potentially drive prices down.
While such a scenario may seem unlikely, it’s worth noting that ICE deported 271,000 immigrants in fiscal year 2024, the highest total since 2015. Population trends, whether driven by deportations or natural growth, will remain a crucial factor shaping Arizona’s housing market in the coming years.
#RealEstate #ArizonaHousing #MaricopaMarket #NewHomeSales #HousingTrends #ConstructionNews #HomePrices #EconomicOutlook
Resources:
- The Cromford Report ©, January 27, 2025
- "Report: Undocumented Migrants Make Up 3.5% of Arizona’s Population." KJZZ News, 30 July 2024, www.kjzz.org/kjzz-news/2024-07-30/report-undocumented-migrants-make-up-3-5-of-arizonas-population. Accessed 7 Feb. 2025.
- Immigrants in Arizona. American Immigration Council, www.map.americanimmigrationcouncil.org/locations/arizona/. Accessed 7 Feb. 2025.
- Unauthorized Immigrant Population Profiles: Arizona. Migration Policy Institute, www.migrationpolicy.org/data/unauthorized-immigrant-population/state/AZ. Accessed 7 Feb. 2025.
- Unauthorized Immigrant Population Profiles: Arizona. Migration Policy Institute, www.migrationpolicy.org/data/unauthorized-immigrant-population/state/AZ. Accessed 7 Feb. 2025.
- Immigrants in Arizona. American Immigration Council, www.americanimmigrationcouncil.org/sites/default/files/research/immigrants_in_arizona.pdf. Accessed 7 Feb. 2025.
